Employer gets partial victory under CFAA

Every employer knows that angry union members can spell trouble. After it fired a union employee, Michigan-based Pulte Homes discovered just how far a union will go to protect its members. In addition to filing a complaint with the National Labor Relations Board (NLRB), in which it alleged the home builder fired the employee because he supported the union, the union attacked the company’s phone and email systems by flooding them with calls and messages, making it practically impossible for Pulte employees to complete their daily work.

Pulte sued the union, alleging that it violated the federal Computer Fraud and Abuse Act (CFAA). On Aug. 2, the 6th Circuit granted a partial victory to the company in Pulte Homes Inc. v. Laborers’ International Union of North America.

But the decision produced a mixed bag of results, as the 6th Circuit upheld the district court’s denial of Pulte’s motion for a preliminary injunction. Nonetheless, experts say that the court’s interpretation of the CFAA is a good sign for corporations as they move through the digital age because while strikes and picketing usually don’t interfere with a company’s ability to operate, denial-of-service campaigns can be debilitating.

Digital Demolition

In September 2009, Pulte Homes fired crew member Roberto Baltierra from a construction site. While the builder said the firing took place for misconduct and poor performance, the Laborers’ International Union of North America (LIUNA) claimed Baltierra was fired for wearing a pro-union T-shirt on the job site.

LIUNA filed an unfair labor practice charge with the NLRB and launched a campaign against Pulte, using technology as its weapon of choice. LIUNA bombarded Pulte’s sales offices and three of its executives with thousands of phone calls and emails, hiring an auto-dialing service and requesting its members to call Pulte. Through a posting on its website, LIUNA encouraged members to email specific Pulte executives, and Pulte says some of those communications included threats and obscenities. But the true damage came from the sheer volume of calls and emails, which left Pulte unable to conduct business for several days.

Pulte’s general counsel waited four days after the denial-of-service attack began before contacting LIUNA and requesting it stop the attack. The calls and emails continued, so Pulte filed suit, alleging several state-law torts and violations of the CFAA, a statute that both criminalizes certain computer-fraud crimes and creates a civil cause of action.

At the same time, Pulte moved to preliminarily enjoin LIUNA’s phone and email campaign. The district court denied Pulte’s motion, stating that it lacked jurisdiction under the Norris-LaGuardia Act, which requires employers to try to resolve labor disputes through negotiations. Pulte appealed.

Negotiation Questions

The 6th Circuit concluded LIUNA’s phone and email attacks diminished Pulte’s ability to operate, which violates the CFAA. The court held that “a transmission that weakens a sound computer system—or, similarly, one that diminishes a plaintiff’s ability to use data or a system—causes damage.” Two other circuits—the 3rd and the 7th—also have supported the diminished-ability concept.

However, the court affirmed the district court’s denial of Pulte’s request for a preliminary injunction, stating that Pulte failed to comply with Section 8 of the Norris-LaGuardia Act, which requires a plaintiff to make “every reasonable effort to settle the dispute by negotiation.” The court held that Pulte did not engage in enough negotiation.

Pulte leaves an important question hanging in the balance. “When does a reasonable effort to negotiate a settlement end? Is it one offer and one counteroffer?” asks Brian Hall, a partner in Porter Wright’s Labor and Employment Practice. “If [Pulte] had tried to negotiate a settlement with their email and voicemail boxes clogged, the union would have said to rehire the employee, and probably would have given additional conditions. It almost seems Pulte had no negotiating room anyway.”

Given the power of the Internet and social media, labor unions have more communication options than ever at their fingertips, and some resentful members may be tempted to use these media maliciously. Pressing “send” can wreak havoc on a corporation’s ability to communicate not only internally, but also with clients. Luckily for employers, the CFAA forbids impairing a company’s communications in this way.

“If an organization is going to use a campaign of technology to shut down a business’s ability to interact with employees and customers, the CFAA says it’s illegal,” says Sam Matchett, a partner in King & Spalding’s Labor & Employment Practice. “It may not take much to sabotage a company and prevent it from conducting business. Robo-calls don’t cost that much, and the emails are sent and phone calls made with intent to injure the company. The intent is there. Pulte was able to use the CFAA to get relief.”

While the ruling that the union violated the CFAA may deter future abusive electronic campaigns, “corporations need to make every effort to meet the legal prerequisite for filing an injunction,” Hall says.

In-house counsel should know that the CFAA is available for certain situations, providing protection against the threat and/or the act of a campaign using calls and emails.

“If a person even threatens [such a campaign], you are in a position to put him on notice that he would violate the CFAA,” says Matchett. “This will help prove that they had intent. If you become aware of a potential or planned campaign, provide prompt notice to the group to cease and desist, based on the CFAA.”

Glenn Patton, a partner in Alston & Bird’s Labor & Employment Group, says that in addition to knowing the options with regard to statutes, corporations will want to arm themselves with a clear-cut social media policy.

“It’s important that all employers be prepared on how to discipline for social media abuse,” he says.